The October Update on Private Equity and Private Exits

Ernst and Young reports PE-backed issuance falls 84% in Q3 as the IPO window shuts — 21 sponsored companies raise just US$2.9b.

Global new issuance fell dramatically in the third quarter, as global fears of a double-dip recession increased. In Q3, 284 companies (both sponsored and non-sponsored) raised US$28.5b, down 57% from the second quarter, when companies raised US$65.6b, making it the slowest quarter for new deals since the second quarter of 2009. In line with the broader IPO market, PE-backed activity fell sharply in the third quarter, with 21 companies raising just US$2.9b, a decline of more than 80% from Q2 and the  lowest quarterly total since the recession ended. Activity slowed markedly across all geographies, with proceeds declining 82% in the Americas, 83% in EMEA and 92% in Asia-Pacific versus Q2.

As a result, a number of companies have postponed or withdrawn their offerings in light of market conditions. So far this year, 226 companies (including sponsored and nonsponsored) have withdrawn or postponed their IPOs, just short of the record set over the same period in 2008, when 231 companies pulled their offerings. Included were 41 companies backed by PE firms which have withdrawn IPOs so far this year — nine in Q1, 18 in Q2 and 14 in the most recent quarter.

Despite the spate of withdrawals, Q3 saw a number of new filings, albeit at a reduced pace relative to earlier this year; in the third quarter, 44 sponsored companies filed to go public, adding to the 132 that filed in the first and second quarters. In addition, there were two high- profile filings by PE firms — in June, Oaktree Capital Management filed to raise as much as US$100m in an IPO; and on September 6, The Carlyle Group pulled the trigger on its filing. If successful, five of the top six PE firms* would be in the hands of public investors.

To read the full report from Ernst and Young, click here: October 2011_PE-PE Newsletter.

Private Equity, Public Exits is published quarterly by Ernst & Young to provide insight and analysis on capital markets trends as they apply to the private equity-backed IPO market.  Contact information for the E&Y team is published in the attached report.

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